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Kindle Notes & Highlights
by
Ori Brafman
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October 2 - October 7, 2021
The Combo Special: The Hybrid Organization
eBay represents the combo special. It’s neither a pure starfish nor a pure spider, but what we call a hybrid organization.
Companies like eBay combine the best of both worlds—the bottom-up approach of decentralization and the structure, control, and resulting profit potential of centralization.
eBay is a centralized company that decentralizes the cu...
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eBay’s competitive advantage is deeply rooted in its decentralization.
The decentralized user ratings proved to be eBay’s biggest competitive advantage.
Trust begets trust.
Amazon is happily capitalizing on these acts of generosity.
The original idea behind Oprah’s Book Club was to inspire members of her audience to read good novels and to take time for themselves.
Oprah became one of the most influential figures in publishing. She never received a cut of book sales; instead, she catalyzed a network of readers and created a decentralized community with unexpected power.
While Oprah’s production company remained centralized, she had added a decentralized element to her show.
To facilitate these kinds of decentralized user interactions, in 2005 Intuit launched TaxAlmanac.org, a Wikipedia equivalent for tax issues.
Reddit is probably the ultimate cent comp exploting de-cent. Netflix could lunch a review feature would prob yield similar results
the community wants to interact with one another.”
The collective knowledge of the entire tax professional community is far more powerful than any handful of experts.”
The intelligence is in the network
As in the music industry, starfish are wreaking havoc in the software industry.
Once one company offers decentralized open-source software, its competitors must follow suit in order to stay in the game.
Google, Sun, and IBM have put their customers to work, while Intuit, Oprah, and Amazon have given them a voice.
This brings us to the second type of hybrid organization: a centralized company that decentralizes internal parts of the business.
companies have a CEO and some hierarchy, but they also hav...
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He separated GE into different units that had to perform as standalone businesses. Each unit maintained its own profit-and-loss statement. Units were so independent that if unit A wanted to buy a product from unit B, it had to pay the full market price.
Welch did to ge. Se way ikea is organized
Appreciative inquiry draws upon knowledge from the edge of the network.
Seems like increasing network density and intelligence. Both attributes of de-cent orgs.
In whatever form, the introduction of decentralized elements has helped companies ranging from eBay to IBM stay competitive.
companies can’t rest on their decentralized laurels; they must seek and pursue the elusive “sweet spot.”
In Search of the Sweet Spot
Drucker’s inquisitiveness made his approach to understanding companies unique.
Most researchers studying corporations focused their attention outside the firm.
In doing so, they missed a big part of the story: what happened inside the company to make it succeed or fail.
We took this too far
top management is a function and a responsibility rather than a rank and a privilege.”
The decentralized sweet spot is the point along the centralized-decentralized continuum that yields the best competitive position.
Decentralization brings out creativity, but it also creates variance.
Just because you’re on the sweet spot now (as General Motors was in the 1940s) doesn’t mean it won’t shift in the future.
Flexuous curves
if people are doing something illegal or potentially embarrassing—in other words, if there’s a reason for them to seek anonymity—the sweet spot is likely to move toward decentralization as well.
The Soviets focused on technology that reflected imperial values: higher-ups telling the common people what to do. But in the twentieth century, communication between individuals was far more important for economic growth than communication between governmental authorities and the masses.
Still thinking about btc and el salvador. What is the angle
RULE 1: Diseconomies of Scale
In the past, small players might have had the advantage of being flexible, but the safe bet would have been on the big guns.
Small size combined with a large network of users gives these companies both flexibility and power.
As diseconomies of scale increase, the cost of entering a new market dramatically decreases.
RULE 2: The Network Effect
The network effect is the increase in the overall value of the network with the addition of each new member.
For some of the most successful starfish organizations, like Skype and craigslist, it costs absolutely nothing to add a new customer.
While it used to cost millions or billions to create a significant network effect, for many starfish organizations the cost has gone down to zero.
RULE 3: The Power of Chaos
Starfish systems are wonderful incubators for creative, destructive, innovative, or crazy ideas.
Where creativity is valuable, learning to accept chaos is a must.
RULE 4: Knowledge at the Edge
The best knowledge is often at the fringe of the organization.
RULE 5: Everyone Wants to Contribute
people throughout a starfish have knowledge, but they also have a fundamental desire to share and to contribute.
RULE 6: Beware the Hydra Response
Attack a decentralized organization and you’ll soon be reminded of Hydra, the many-headed beast of Greek mythology. If you cut off one head, two more will grow in its place.
